Kroger Stock Falls on Earnings. Why the Grocer Is Cutting Sales Guidance.

巴伦周刊（Barron's），《巴伦周刊》（Barron's）官方站点，提供商业、金融与市场新闻及分析。关注

Kroger cut its fiscal-year same-stores outlook, excluding fuel, as the Inflation Reduction Act impacted sales at its pharmacies. (Getty Images)

Key Points

Kroger lowers its fiscal-year same-store sales growth outlook, excluding fuel, to a range of 0.2% to 0.8% from a prior range of 1% to 2%.
The new guidance includes a hit of roughly 140 basis points tied to the Inflation Reduction Act.
The grocery giant reports fiscal second-quarter earnings of $1.05 a share, missing Wall Street expectations of $1.07.

Kroger’s latest quarter gave investors little reason for cheer, and its stock was paying the price on Friday.

The grocery giant now expects same-store sales excluding fuel to rise between 0.2% and 0.8% for the fiscal year, down from a prior range of 1% to 2% growth. The new guidance includes a hit of roughly 140 basis points tied to the Inflation Reduction Act, which ⁠lowered prescription drug prices for Medicare beneficiaries and impacted pharmacy revenue. Management separately reaffirmed its earnings guidance of $5.10 to $5.30 a share for the fiscal year.

Kroger separately posted fiscal second-quarter earnings of $1.05 a share, narrowly missing Wall Street’s call for $1.07. Sales of $34.6 billion were in line with analysts’ projections.

Shares slid 2.6% to $55.48 in premarket trading. Futures tracking the benchmark S&P 500 index rose 0.6%.

The latest figures were released as persistent inflation forces middle- and lower-income households to prioritize essentials over discretionary spending. U.S. consumer sentiment weakened in August following an unexpected decline in U.S. retail sales in July, which marked the first drop in nine months.

The Inflation Reduction Act has been a drag on other big-box retailers. The bill, which allows Medicare to negotiate the price of certain prescription medications, introduced new price caps on 10 drugs for chronic conditions when it took effect in January.

Kroger rival Walmart faced similar challenges at the time of its last earnings report in August, as the change had a larger effect than anticipated on quarterly same-store sales.

Kroger noted that it had raised its dividend by 11% earlier in the quarter, marking the 20th consecutive dividend hike. The grocery chain bought back $1 billion worth of shares during the period and has repurchased $1.2 billion in shares this year under a $2 billion board authorization announced late last year. Kroger expects to complete the remaining buybacks by Jan. 30, 2027, the end of the fiscal year.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

添加评论

点踩

分享查看原文

参与讨论